On 11 August 1961, Mrs Tunstall applied to the York County Court for a grant of a new lease of five year's duration pursuant to Part II of the Landlord and Tenant Act.
Ormerod LJ began by analysing Evershed MR's statement in Pegler v Craven that "in some circumstances it could be said that a company in actual occupation was but the alter ego of the tenant" and that while such a conclusion might be arrived at in some cases, it could not be arrived at in Pegler for the company could not be said to be a mere alter ego of the applicant in that case: [McKee J] appears to have relied upon the first part of that passage as indicating that in a case such as the one under consideration, the court will hold that it is the intention of the landlord or tenant as the case may be to carry on the business notwithstanding that the business has been assigned to a limited company, if the company is so completely under the control of the landlord or tenant respectively as to amount to the alter ego of that party.
In my judgment the fact that she holds virtually the whole of the shares in the limited company and has complete control of its affairs makes no difference to this proposition.
[...] It is to be assumed that [Mrs Steigmann] assigned her business to the limited company for some good reason which she considered to be of an advantage to her.
She cannot say that in a case of this kind she is entitled to take the benefit of any advantages that the formation of a company gave to her, without at the same time accepting the liabilities arising therefrom.
She cannot say that she is carrying on the business or intends to carry on the business in the sense intended by paragraph (g) of the subsection and at the same time say that her liability is limited as provided by the Companies Acts.In the course of the case, Ormerod LJ had asked if there was "anything to merit a departure from the main principle of Salomon v. Salomon & Co. Ltd.", with the judges subsequently being referred to cases such as Daimler Co. Ltd. v. Continental Tyre & Rubber (Great Britain) Ltd.: That was a case of a company registered in this country, the whole of the shares of which were owned by enemy aliens, and it was decided that to trade with that company would be trading with the enemy under the then current legislation.